What it takes to make a living trading systematically

Transcript

Show intro 0:01: Are you looking to become profitable in trading, but you're tired of all those strategies that never stick? Well, you're in the right place. This is the desire to trade podcast with Etienne Crete.

Hear interviews with top traders from around the world who have actually made it. They'll share their tips, techniques, and stories to help you become profitable, stay inspired, and scale up your trading. So welcome to the conversation.

Here's your host, Etienne Crete.

Etienne Crete 0:28: So welcome back, this is Etienne here with Pavel Kýček. Looking forward to discussing a trading experience. Eighteen years of trading here, so we're going to discuss what we've seen in prior years.

Welcome to the podcast. Thank you. Thank you, Etienne, for having me here.

Thank you. I appreciate it. So let's kind of start with me before what you're doing these days as a trader and what do you focus on?

Pavel Kýček 0:48: These days I'm focusing on algorithmic crypto trading of crypto and stocks. We are running some services for institutional and retail clients in crypto and on my own account I'm trading stocks algorithmically and very systematically. No discretion at all.

Awesome! So let's go back in time. Tell me when you started trading.

What was that like? Told me you started trading at 18 years old. What was it like?

Yeah, well I started trading eighteen years ago when I was 18 basically, right now I'm 36, close to 37 and yeah it was a very normal way how usually people start trading, so I started discretionary trading, I lost for a few, I was losing honestly for a few years because I didn't know how to do it properly.

I was trying in many ways this kind of very normal type of trading like double tops, double bottoms, know, we did this type of trading which was not working for me at all, as usual. So then I went through some research and after a few years of trading I went to semi systematic, I would call it, type of trading when I was trading basically mean reversion entries on E-mini indices and breakouts on crude oil.

This fully discretionary average holding time between five to twenty minutes.

Etienne Crete 2:17: Day trading, that's very interesting. What made you go through fully systematic?

Pavel Kýček 2:21: Yeah, well for me discretionary trading was very very psychologically demanding honestly, and when my daughter was born, it was more than seven years ago, I made a complete switch. Even before I traded systematically, I would call it more like systematic investing because my average holding time was about thirty days to ninety days, these types of rotational strategies on stocks, basically on ETFs.

So it was the type of trading I used to be doing before my full jump into systematic trading and when my daughter was born I made complete switch because I wasn't able to support family, taking care of them basically and also being fully focused on discretionary trading because for me discretionary trading is toughest, the highest level of trading that one can do.

Etienne Crete 3:21: Interesting. What made you stop losing money? You told me you lost money for a few years, what made you stop and kind of get profitable?

Pavel Kýček 3:29: Probably when I started being more systematic and started making some research because I'm very data driven, I like to understand markets very deeply and when I saw that for example, the indices tend to mean revert on shorter time frames, then I was like, okay, maybe I shouldn't be trading momentum type of strategy on indices on five, ten, fifteen minutes time frame, maybe it doesn't make that much sense.

And then I also saw a trader was combining this type of mean reversion trading with level two data, basically getting into the trade and trying to find nice entries on supports and resistances together with some overextended moves and this was something that firstly started working for me. Some people say that you gotta keep your discretion to make money, like to make better money trading, you cannot do it with like systems.

Etienne Crete 4:33: What do you say to them?

Pavel Kýček 4:34: I think both ways are doable. I would recommend everyone to start with understanding the markets first, because I was a total beginner, it was only about making money as quick as possible.

And because of that I basically jumped the learning phase of what markets are, how they are behaving, what they are doing if something happens, what they are doing if they are in trends, what they are doing if they are in some sideways market or sideways movement.

And if you really understand the probabilities, then you can trade discretionary if you want to. I don't want to get back like never ever, even though I would say that right now I would be much better discretionary trader than I was before because since then I made a lot of research on a daily basis and my understanding of markets is on different level than before.

So I think that the biggest problem is that people push themselves to make money as quick as possible without proper understanding of markets.

Would you say if you trade

Etienne Crete 5:45: systematic you kind of give up some patterns like support and resistance, head and shoulders, chart patterns, cannot re-trade them anymore. Would you say that's true or would you say you still trade the same thing but in a different manner? I don't trade

Pavel Kýček 5:57: these very basic patterns but I do have some strategies that trade, for example, pin bars. But let me give you a perfect example. Most retail traders trade pin bars as mean reversion type of pattern,

but if you make your research over a lot of data, you will see that it is working much better as failed breakout, failed mean reversion pattern that you should basically trade against this pin in the direction of the pin, and this is working much much better.

And again, if you don't know it, you just trade somehow. That's why I'm always pushing research first. But back to your question, basically I don't mind that I don't trade these patterns at all because I'm in the market to make money and I don't care that much if I will use support resistance or if I use some kind of patterns.

I just want to use the best approach I can that is robust enough, that is made that way, that it should survive in markets and that's all I need. And to have as many of these approaches as possible in one portfolio.

Give me an example of maybe one approach to use, like very high level, for like how to trade systematically, like what are some patterns you So look probably everyone knows these very basic trend following types of strategies like breakout of fifty days high or breakout of all time high or moving average crossover.

This is not exactly something that we trade, but these kind of logics work in markets, especially in crypto and on stocks too, it also depends what kind of market you trade. And on the other side, we are also trading one day breakout based on, for example, the idea of Larry Williams volatility breakout basically.

So I tend to make a lot of research on very old models so we can see that they have huge data of out of sample, a huge period of out of sample basically.

Especially in crypto where we don't have enough data, we can play with six, seven years of data, you have to know that your idea is robust and that it is not just an over fitting type of strategy on five, six, seven years of usually trending data.

Etienne Crete 8:29: You see a lot of new people now jumping into cryptos because it's like a cool thing to be and it's a cool thing to trade now. You traded a long time before crypto and then you moved to crypto. What do you think people do wrong when they go through crypto these days?

Pavel Kýček 8:41: Well, they think that they can make money very quickly, especially on small coins. But again, if you look at the research, mostly the smallest coins tend to pump and dump, know, because some favorite influencer is just hyping the coin up and it's falling to zero. So the biggest problem is that yes, crypto is for sure the least mature market and the least efficient market you can trade right now.

That's why we are trading it alone. But it is still efficient enough that if you don't know what you are doing, you will lose money. And people are here to make very quick money, that's why they are trying to leverage assets which average volatility is 10% a day,

so it's definitely not necessary and they just over leverage and in crypto there are these types of moves when crypto can fall by 20–30% a day and if you don't know what you are doing, you can be lucky and make a lot of money under this type of environment when usually these amateurs

Etienne Crete 9:50: lose it at all. So that's a bit complicated because of course it gives you strategies on other markets, crypto you can't retest it too much I guess in the past. How do you make sure you have an edge with crypto?

Pavel Kýček 10:00: Yeah, that's a very good idea. That's a very good question, sorry. So first of all I'm always trading strategy that is tradable on different assets.

It doesn't mean that I can fully take the strategy and use it, for example, on stocks or commodities, but it means that the logic, for example, this kind of breakout is working there, but I have to change exit because crypto is much quicker. So that's perfectly okay for me. Then every strategy is super simple.

I'm always saying that I'm trying to be very simple on single strategy level and much more complex on portfolio level, because on portfolio level you can avoid over optimizing much simpler than on the single strategy level. So that's why most of our strategies have two to three conditions maximum and they really are built with the so called idea first approach,

which means that I'm not data mining, I always know what I want to trade because that way I know when the strategy should be working and when it also shouldn't be working. Plus, I do expect that some of these strategies will fail in the future.

That's why we have in the portfolio 15 strategies and basically then it is working slightly differently than if you are trading one, two, three, four strategies because then every strategy has the weight of 10 to 20% maximum of the portfolio and I'm basically managing the whole portfolio on a higher level based on how the crypto market will evolve because we know that it will get somewhere.

If you, for example, check the cycle of immature to mature markets on commodities or on stocks, I love the periods before or during the takeoff on stocks and commodities in 1980s, 1990s. These assets were moving like crazy, similar to crypto.

And there you could see how the market is evolving and what will probably happen in crypto too, but much quicker because of the technology. How do you manage a portfolio of 15 strategies? Do you kind of add risk to some, reduce risk?

Do you turn off strategies, turn on some of them? Or how do you manage it all? Yeah, well, right now we are not turning off any strategies but we are prepared for it.

Basically, it is working that way that we trade 15 strategies plus we have many different ones in so called incubation period or incubation phase. Means that we run those strategies on our accounts only and we basically check them on live market before we implement them to our clients. And for every single strategy we have in the portfolio, we have some benchmark.

It usually means that we have different strategies or similar to those strategies we are trading live. And we build a benchmark for every single type of trading for breakout, momentum, trend following, mean reversion basically. And based on it we can compare the strategy we are trading against the benchmark plus we also check how the strategy is performing in the environment we are right now.

Give me an example because I think it is super, super important to understand it. If you know when your strategy should be making money and when it shouldn't be making money in these periods, it will be always in the market, then you don't have to be afraid of drawdowns that much. Because if the market is trending to the upside and your trend following long strategy is making money, then it is okay.

If it is not making money or it is even losing money, then probably something is wrong with your strategy and you should check it much deeper and see if there is not something wrong with this strategy. So we are managing it that way, back to your question, that we fully understand what we are trading on single strategy level and portfolio level.

We compare the environment we are right now or we will be with the performance of the strategy and based on it we are prepared to make some changes if necessary.

Etienne Crete 14:16: Some people would think that because it's systematic and automated, you make a lot of filters, filter for the channel, filter for this, filter for that, see you only keep it like two or three conditions, how do you make this work without too many filters? Yeah, well

Pavel Kýček 14:29: we work with maximum one filter usually or not usually I would say 15% of those strategies use one filter and another 50% of the strategies don't use any filter at all. You know, it is very simple to find some strategy that is working on past data. Unfortunately, we don't read history, so that's why I tend to trade strategies that are not that sexy on the past data, they can go with one year, two years of sideways market

but because these are part of the portfolio, I want much more to the be and to trade exactly in times when we need them or when we need it to trade.

So that's why, especially if I build a strategy for portfolio, I tend to go very simply and I don't mind if the metrics are not that great on the single strategy level. Firstly, if you are a discretionary trader and you want to start trading systematically, I would say that the number one thing to change in your mind is that systematic trading should be very simple on a single strategy level.

You shouldn't try to put together all the conditions you were basically checking on the chart when you were trading discretionary because it's a very different type of approach.

I think the mistake is to go and copy what you do discretionary, then trying to make it into an algo. Exactly. Definitely don't trade cup-and-handle systematically because

Etienne Crete 16:14: it's not working. Yeah, fair point. You mentioned you trade mean reversion for crypto.

How do you make this work? Because the market you would think is always trending,

Pavel Kýček 16:23: always going up and up. How do you add mean reversion to this? Yeah, well again this is because we trade portfolios and maybe I will repeat this word portfolio a lot because to me it is the backbone of our trading.

So we can have, for example, mean reversion short strategies in the portfolio because we have momentum long strategies. And we use mean reversion short strategies to get a different exposure in those times when markets are overexposed to long side. And we know that exiting a trade is not the best option because you know that people can be emotional much longer than you would expect.

And especially in crypto this is true. So that's why we have mean reversion type of strategies and they work as a balancer or a diversifier because the correlation to trend following strategies is very nice, it's about zero or even negative. So that's why we trade them plus.

What is also important is that especially those smaller coins, because we trade the whole liquid crypto futures universe which are basically up to 300 coins, we rank them based on liquidity, basically the whole universe so especially those smaller coins tend to be pumped and then dumped by some influencers and so on. So there is a huge inefficiency in even alpha in this type of trading, but it is risky.

So especially in mean reversion type of strategies, you have to have lower weight or smaller positions on your capital and you also should be in a position very shortly, like one-two days maximum.

If the idea is not working, you should get out. Good point, for sure.

Etienne Crete 18:16: Tell me about the company you started, you do not trade for people, you have a fund where you kind of manage capital, lot of people. Tell me how that works out and what made you want to start that. Yeah well,

Pavel Kýček 18:25: we started two years ago. Firstly, it was a project for me and the founder of Robuxio because I'm not a programmer. I was trading and I'm trading stocks algorithmically but not automatically because I cannot program everything on the back end.

But in crypto, it's 20 fourseven market, it's very different to stocks because there I just ran my scanners and I'm running my scanners at the daily close-up before the open and I just put the orders. It's ten minutes of work, no problem for me. But crypto is very different because in crypto if the market is moving like crazy, which is usually the time when you want to be in the positions, you have to be very quick in your positions.

So that's why I wanted to build my own solution for portfolio trading and we trade up to fifty, sixty, 70 open positions in one time with very small exposure. It's not possible to do it manually.

So I was basically trying to find people that would help me with that and thanks to Twitter we built a group of three people, we started building it and after a few months I made my due diligence honestly I didn't see the same type of service we are running right now.

So just then we started building the company in public and right now we are fully in crypto and we run service for institutional and retail clients too. Cool stuff. Your exits are kind of different.

You say you don't use stop losses but you have a way to exit that's particular. Tell me how that works out, how do you decide to exit the market? Based on exit conditions, because that's a very good question and I could debate about stop losses in general a lot because I think it is one of the biggest mistakes of many small traders.

They tend to have very small stop losses and they are just basically fake outs of the market. For example, we are not using stop losses at all in crypto, but we can do it because every position has maximum one to 2% of the capital. The allocations are very very low and we hedge most of our strategies with different kind of strategies: momentum ones with mean reversion and this kind of logic is in the portfolio.

And what I'm saying is that usually you should build your strategy without stop loss and just then add the stop loss because if you run your research over hundreds and thousands of different strategies, you will find out that usually stop loss is worsening the performance. If you are trading now, if you trade with leverage or your account is small and you want to take advantage of leverage and pushing it a bit,

then of course you have to have your stop loss in the market because it's about risk management first. But what I think is the biggest or one of the biggest mistakes of retail traders is that they think about stop loss as an exit management tool and risk management tool, both.

But these things are different. As a risk management tool, it's great. As an exit management tool, it's not that good.

Let me give you one very short example. If you, for example, test your trading stop loss and you test it that way, that you would have your stop in the market, which means that once the price touches the stop price, you are basically out of the market. It is working somehow and if you exit that way, that if,

and you are trading on the daily timeframe, if the market goes through your stop price and you exit at the end of the day, usually like 95 percent of all strategies you can test that way will get better results.

Why? Because lower time frames tend to mean revert and it's valid everywhere on every market. So yeah, that's just one of examples of how you can take advantage of the volatility and mean reverting type of

Etienne Crete 22:39: characteristics of basically any market. Interesting, so if you haven't been whipsawed out by that kind of stop you're asking about, you wouldn't be out of the trade, you're staying in the trade because price goes back in your favor after. Exactly,

Pavel Kýček 22:48: exactly. Or you can exit anyway but on the daily close for example, or four hours based on what time frame you trade, but it's always better statistically that if you have some stop loss, the price goes through the stop price and you don't exit, but you exit at the close of the price or of the bar, sorry, you will get better performance on average. Wow, interesting.

So what about take profits? Are you kind of take profit to

Etienne Crete 23:17: close your trades when you're in profit? Or do you wait for them to fall back?

Pavel Kýček 23:20: Yeah, well we don't use take profits at all. Again, I don't think it is a bad approach but it depends on the asset you trade and it also depends on how you trade in terms of if you trade just one strategy or again the whole portfolio. I'm trading momentum type of strategies and for momentum struts profit targets are again not the best approach how to exit a trade.

So we are using time stops, which means being in the trade for X days. What we are also using is this kind of exit in the market, for example for breakouts, what is very nice condition is that if for example it's close above the previous day's close, you get out of the market because you are again getting out of the market if the markets are somehow overextended shortly, and in general we are trying to use exits that reflect markets more

which is usually not a profit target. Interesting.

But for example, for mean reversion type of strategies, a profit target is definitely one of possible exits. But again, to stress one thing, especially in crypto, we don't have enough data and I don't want to over optimize strategies on just five years of data and say, okay, 7.6% profit target is the best one based on last five years because we know that crypto definitely won't be similar in next five years. Mhmm.

Show intro 25:02: This is the Desire to Trade podcast

Etienne Crete 25:05: with Etienne Crete. Interesting. So tell me more about the time stop.

Because a move could happen very fast and could happen like worse in over days. How do you determine the kind of time stop for your trade?

Pavel Kýček 25:17: Yeah. It depends on the logic with which you enter to the market. For example, this is working great for very short type of breakouts, for example on daily timeframe.

If you know that you want to catch some initial move only but you don't want to stick with the position and change it or continue with the trend follower, then using these time stops being in the market one to three days is working very nicely and it's made on a lot of research, especially on commodities.

Because I used to be trading these kind of breakouts on commodities too and usually these type of very quick moves tend to be reversed after some time. So first you have to know if you want to build trend following type of approach and sticking with a position for another one to three weeks or you just want to extract this very short type of movement after the initial breakout.

Interesting. So it is really about the methodology you are using for exits — sorry, for entries — because to me, I know that there is a debate what is better if these are exits or entries; to me it is always connected because there are definitely entries for which there are much better exits than for others and that's why you have to think about it as a complex.

Etienne Crete 26:49: That's a good point, definitely interesting. Now you're on Twitter, get people probably reaching out to you and telling you about their stories of how they lost money, how they get profitable with trading. What is the ethical mistakes people make in trading crypto or any kind of trading in general?

Pavel Kýček 27:03: They start trading too early with their money. They don't understand the market in general, I would say. And they don't understand risk management.

And I would say one thing, that people are not thinking about it much. I'm in the market to take their money. You are in the market to take someone else's money.

We are in the market to make money. And this is not a place we can just extract profit. It's competition.

So you have to think about trading as a competition. It doesn't mean that it has to be super difficult. In fact, our strategies are pretty simple, but you have to understand the market because if you don't understand how the market is moving, what does it mean that it is trending, what does it mean that it is sideways based on your strategy or your strategies you are trading, you will have very tough times when you will go through the drawdowns.

Because this is probably one of the biggest mistakes traders do even though they have some approach that could be profitable if they have this approach. Then they don't stick with the solution during the drawdown. And it was my mistake too, I think everyone made these mistakes in the past.

Don't get me wrong, it's tough, drawdowns are always tough. I've been trading for over eighteen years and I'm definitely not enjoying drawdowns but again, if you understand what you are trading, you can get back to the data, for example, if you trade systematically and you can check what is happening and if something like that happened in the past.

And if it did, you are pretty okay, you just to be focused and disciplined and stick with the solution.

drawdowns with trading discretionary stuff because you always like, it always impacts how you trade, always impacts So your next

Etienne Crete 28:56: when you trade systematic it's easier because you just have to rely on the system. It is. And everything is a lot easier for sure.

Yeah, also emotions of course, especially

Pavel Kýček 29:06: in discretionary trading, emotions are huge and you have to work on it a lot, like a lot. Because being disciplined during a highly volatile market, when you are always under some type of emotions, especially if you are trading intraday, because I don't say that intraday discretionary trading is the top end type of trading you can choose so you can behave that way.

Probably it's not the type of trading you can do at night after your children go to bed and you were working ten-twelve hour days at work, because again you are against the biggest professionals that are trying also to make money there.

Definitely. Life policy then, trading is just like a zero sum game then. Yeah.

How do you explain that? Well, I'm thinking about it because if you check some research and I'm really research driven, it is not like completely zero sum game but I'm thinking about it in that way that if you lose or you have to lose for me to make the money. And I'm always saying it because people don't understand it that much — the market is not there to give you money.

You have to have your edge. Firstly, that's the most important thing you have to know, that you have edge over the other market participants, and just then you can even start thinking about making money. But it's a long term journey.

I would say that you have to understand quite a lot of things before you can be

Etienne Crete 30:48: comfortable in trading and in programs and with the volatility and so on. How do you go about understanding the market? It feels like you can read book about it or you can watch videos about it, is that enough for you to understand more about the market?

Pavel Kýček 31:02: Books are great, you have to know which books to read, so I always recommend books from algo traders that who have some proven track record. For example Nick Rage is great but there are others Laurens Bensdorp doesn't matter that much in fact I would choose Algo Traders because based on what they are showing you, you can again understand the market and then you should always start your own research.

It doesn't have to be that complicated, people are often afraid of it, but the start can be as simple as downloading data from Yahoo for example, opening an Excel spreadsheet and looking at what is happening if market is above some moving average, what is happening if market makes some move that is twice as big as the long term average.

You know this kind of understanding is important and you can do it pretty simply. Like go back to time and day on a chart. Exactly.

Even if you want to be discretionary, I think you should understand the market on that one. That's my way, that's how I am confident in the solution and how I can offer it to our clients.

Etienne Crete 32:20: What I realized over the years is that a lot of traders, you can of course trade by yourself and do all yourself and it's good, but a lot of good traders have teams around them, you have coders, you can have them coding things,

Pavel Kýček 32:30: How did you kind of find that team? Well, I would use social media a lot. It's helping talk to people that are trading.

In my example it was really about Twitter. I just went to Twitter with the idea that I want to find someone. So I started giving away quite a lot of free stuff, quite a lot of ideas and logics and I was aiming for the idea that if I will give away good stuff someone will see that I know what it is about and it just came.

They found me through some free trend following strategies I was giving away and we started building the team. So I think you have to know what you want to get. It's very important even in life in general I would say.

Yeah, because if you can imagine having to do all the trading, recording and everything, it's just a lot of work. I don't know if it. I know that I wouldn't be there without my team or not my team, these are co owners of Robuxio also, because I can program in a way that I can program my strategies, my portfolios in some backtesting platform, I can do one or two things in Python and I can work with macros in Excel for example

so I can test everything.

But what I cannot is build an automated engine that is able to trade and we were working on it for two years with firstly three people and right now we are contracting another two to three programmers.

So it takes time and usually people underestimate how much time automated trading takes because I don't think retail traders who want to trade systematically should aim for automatic trading, especially if they want to be more advanced, for example, trading in many, many positions. I think on most markets it is doable mechanically, like I do on stocks for example.

But in crypto

Etienne Crete 34:39: it's hard, you cannot do it with full automation because you just have to be very good there. Tell me about the transition from trading your own account to then trading capital for other people. Was that a big transition, was it hard to do or was it easy to go from trading for fun?

Pavel Kýček 34:55: It wasn't that hard because I had it in my head for a long time. It wasn't that I woke up one day and I thought okay, let's start trading someone else's money. Firstly, we knew that the solution has to be really institution grade, because from the start we were thinking about offering the solution to institutions too.

So it was really about trading on our accounts, making all these mistakes on our accounts, building building building, getting the confidence that what we are trading is what we should be trading, because it is not always the truth with automated trading. Oftentimes people don't even know that they trade something different than what they back tested because the logic can be, for example, slightly different.

So yeah, in our case it was something we were preparing for one and a half year.

And I was always, I always wanted to trade this way because it's about leveraging the capital and leveraging the edge you have, so it makes sense to me. Yeah. It add any kind of pressure to you as a trader to kind of perform better or?

I would lie if I would say that there is not bigger pressure. There is,

but because we are trading systematically and automatically and we tested everything thousand times, the pressure is much lower and what also helps is that almost every one of our clients knows what our solution is about, they know that we can be in a drawdown for a year without problem, they know what the expected drawdown is, I'm trying to be with them in touch through YouTube videos and through newsletters.

So I'm really trying for the client to understand the solution, because if you don't understand what you trade and it's always true, it doesn't matter if you trade other people's money or your money, if you don't understand what you trade, you won't stick with the solution long enough to make money over the long term.

A lot of

Etienne Crete 37:07: traders that have a fund, they always think people want to get out of the fund like in the worst time, in the drawdown. Do you see the same thing happening? People want to get out when it's like a drawdown happens?

Pavel Kýček 37:16: What I see is that people are getting excited when we are performing well and then usually some type of drawdown happens you know so this is something that I usually see but it's true that Murphy's laws are working in trading. So if I'm implementing new strategy for example I always expect that I start with drawdown because I don't know why, don't ask me why please, but usually I'm always starting new strategies with drawdown.

What's also a very good idea, not mine, I get it from one hedge fund manager is basically waiting for some type of lower drawdown before you start trading the strategy.

It's good because you are psychologically somehow prepared that if the strategy is not working and it's getting into bigger drawdown than expected you can switch it off, but you are at least halfway to this metric, so yeah it's working. Interesting.

Etienne Crete 38:19: Have you ever turned off strategies you go live with, like because they don't work from the start? Or let's say you have something new and then you try it for a while and then it doesn't work at all? I did both, because in the past was

Pavel Kýček 38:31: playing also with data mining type of strategies, in terms of that I had an automated solution that was basically trying to find some strategies and then they went through very tough robustness procedures to know that the strategy is robust enough but it didn't work — or don't get me wrong, it could work,

but I wasn't prepared for this type of trading so I switched the solution completely off and I returned back to idea-first type of trading on daily time frame which is giving me a lot of comfort because if you are trading some very short time frames you can have very good strategy that is performing well and the performance can stop and turn to the south very quickly, especially on five-ten minutes time frame because the edge can be arbitraged out pretty quickly,

but if you are trading on daily time frame then usually if the strategy stops working, you get into some type of plateau when you can switch the strategy, you can change it slightly or you can just keep with it if you can see that it is perfectly normal. So yeah, sometimes I'm changing strategies but the frequency is like one a year or something like that. I usually tend to add strategies to the portfolio.

Interesting.

Etienne Crete 40:01: At what point is too many strategies? Is there a point where you have to take off some to add new ones or?

Pavel Kýček 40:08: Very good question. Right now we are in the state that we want to add strategies that has some diversification effect to the portfolio. It doesn't have to be a correlation like zero or point two, which means that they move totally differently to any other strategy, but it should always be a strategy that by logic should make money in different periods, in different market behavior than the other ones.

Plus, what we are aiming for is spreading the liquidity too and that's why we don't mind adding more and more strategies. But for example, if I would find some strategy that is robust and is performing in very similar periods than other strats in the portfolio, I wouldn't mind changing the strategy.

Once you have many strats in the portfolio, you are really managing the strategies and you don't have to be afraid of playing a bit with them.

I'm not saying about changing it every month, but for a few months we are talking about this one, six months or once a year or something like that, because especially on higher time frames you should be much more disciplined in terms of that you should stick with your strategy strong enough.

Etienne Crete 41:28: A lot of new traders have like really high expectations of return, want to get to like a really high return per year. Do Do you you have any kind of target you aim for? Do you have any kind of expectations that are different?

What do you kind of see as regions you aim for? Yeah, so firstly,

Pavel Kýček 41:43: I don't have any expectations on yearly basis because I don't know how market will be behaving and now I'm in the market to make money so I want to make as much as possible with some good performance to volatility of the account ratio but I do expect some performance if the market is behaving somehow.

Let me give you an example, since September crypto was in some nice long trend, then it went sideways and then a small long trend again and our clients make between 60% to 110% based on the portfolio they are trading. I can have this type of expectations in crypto because crypto is very volatile and very inefficient.

On stocks my expectation, so in crypto I can have an expectation of over 100% even, especially in good years it can be even more if you know how to trade, but in stocks my expectations are about 15% long term average maximum. Does

Etienne Crete 42:50: that mean that everyone should trade crypto because the returns are higher or should people stay away from crypto instead?

Pavel Kýček 42:55: I think if people want to go to crypto it is pretty good time right now because we can see good ratio in terms of performance, crypto is still very volatile, but the risks are much lower, there are always risks because if you have somewhere huge profits or huge potential then there has to be some kind of risk.

So right now crypto exchanges are much more regulated than before so this is still one of the biggest risks, that's why our clients spread accounts across many exchanges. And another huge risk is being too leveraged or too exposed to one crypto or one coin, because it can happen very quickly that some coin can fall to zero without basically any liquidity, so you have to be prepared for it.

There are very different set of risks and you can make a lot of money there, but if you don't know what you are doing, probably you should learn on some other asset and you should move to crypto then but you shouldn't wait that long because we see it on every immature-to-mature cycle on any other asset that firstly every asset was hugely volatile, hugely trending, many inefficiencies, huge opportunities to make money

which is crypto right now and in the past it was even better. And then you are basically arbitraging or the market is arbitraging the inefficiencies and the volatility out of the market as the liquidity is growing and the potential is much lower. Can I give you one example?

For example, let's look at Bitcoin, always making some basic research on every asset to understand what is the direction of the asset. For example, Bitcoin. Bitcoin is trending very similarly to what it was trending five years ago, seven years ago.

The trends are very clear, very clean, but the volatility is 30 to 40% lower right now than four or five years ago and we can see that there is a trend, that the volatility is getting lower and lower over time and we can expect something like that. I'm not saying that it's for sure in markets there is nothing for sure, know, but highly probably also compared to other assets, this is something that is happening and that will continue.

So then I have to expect that the potential of profits will be lower and lower and this is also the reason why we trade the whole universe of tradable crypto futures because Bitcoin has long term volatility about 0.5% to 2%, let's say, but the small altcoins they can have between 5% to 10%, and that's great especially for traders.

How long do you think until crypto

Etienne Crete 45:57: becomes more flat or less volatile?

Pavel Kýček 46:00: That's a very hard question. What I do expect is that we can see that in crypto the regulation is getting better and better. Basically, market will be regulated at least in Europe in two years thanks to MICA regulation and it is happening everywhere around the world.

And we can also see how institutions want some exposure to crypto. We can see it also on our surveys and that they are interested in what we are doing. So I would expect that in three years crypto will be much less volatile than it is right now.

I would say 30% to 40% less volatile, but it's a very rough estimation. What I know, not know, I don't know what to use the word correctly with the market, but what I expect is, and I can see on trends, that crypto will be for sure less volatile over time. It's for sure, but how quickly it will happen it will be connected with regulations because big hedge funds don't or cannot even make exposure, some of them or some institutions.

So this is something we, smaller traders, can take advantage of.

Etienne Crete 47:21: That's cool. And we covered a lot in this interview, so tell me what can I find you or can I put you after this podcast? You want to reach out?

Yeah well you can go to our website robuxio.com

Pavel Kýček 47:32: if you want to know more about our service just go to robuxio.com/explainer where we explain how everything is working and if you want to follow me personally and my ideas just go to my Twitter account, Pkycek

Etienne Crete 47:48: P K Y C E K. Awesome. Well, thank you for that.

We'll check it out and connect with you there. Appreciate your time and advice here here. Think it's been pretty insightful.

People can get somebody out of this and hopefully we can connect with you and see what we do in the other. Appreciate it. Thank you.

Thank you again for having me here. Awesome.

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